“Long Term Assets” shall mean assets that take longer than a year to be converted
to cash. They are divided into four categories: tangible assets, investments, intangibles and other.
“Long Term
Debt” shall mean payment obligations of indebtedness which mature more than twelve months from the date of determination, or mature within twelve months from such date but are renewable or extendible at the option of the debtor to a date more
than twelve months from the date of determination.
“Net Profit after Tax” shall mean Revenue plus all other income,
minus all costs, including applicable taxes.
“Revenue” shall mean the monetary expression of the aggregate of
products or services transferred by an enterprise to its customers for which said customers have paid or are obligated to pay, plus other income as allowed.
“Subordinated Debt” shall mean Borrower’s indebtedness to third parties as evidenced by an executed Notes Payable Subordination Agreement in favor of IBM Credit.
“Tangible Net Worth” shall mean Total Net Worth minus goodwill.
“Total Assets” shall mean the total of Current Assets and Long Term Assets. For the purpose of calculating Total Assets for
Borrower, the accumulated earnings and foreign currency translation adjustments applicable to Borrower’s Canadian and European subsidiaries are excluded.
“Total Liabilities” shall mean the Current Liabilities and Long Term Debt less Subordinated Debt, resulting from past or current transactions, that require settlement in the future.
“Total Net Worth” (the amount of owner’s or stockholder’s ownership in an enterprise) is equal to Total Assets minus
Total Liabilities. For the purpose of calculating Total Net Worth of Borrower, following shall be excluded (i) accumulated earnings and unrealized foreign currency translation adjustments applicable to Borrower’s Canadian and European
subsidiaries and (ii) all income and losses applicable to foreign currency adjustments for each period but not excluding such foreign currency adjustments for annual periods that must comply with GAAP.
“Working Capital” shall mean Current Assets minus Current Liabilities.
(B) 1. Borrower will be required to maintain the following financial ratios, percentages and amounts as of the last day of the fiscal
period under review (quarterly, annually) by IBM Credit:
|
|
|
| Covenant |
|
Covenant Requirement |
| (i) Revenue on an Annual Basis* (i.e. the current fiscal year-to-date Revenue annualized) to Working
Capital |
|
Greater than Zero and Equal to or Less than 37.0:1.0 |
|
|
| * Annualized Revenue from intercompany sales are excluded from this calculation. |
|
|
|
|
| (ii) Net Profit after Tax to Revenue** |
|
Equal to or Greater than 0.20 percent |
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